Why Americans should think twice before filing for a tax extension beyond July 15

The federal government has moved the tax filing deadline from April 15 to July 15 due to the novel coronavirus pandemic, and Americans can even file for an extension beyond that to Oct. 15. But they should do so with caution.

“You can extend, but the payment is always due,” Paul Miller, founder of Miller & Company LLP, a New York City-based CPA firm, told Yahoo Finance’s “On The Move” this week. “And when you extend, you extend with interest and penalties.”

Read more: Tax deadline postponed: Why you should still file as soon as you can

Taxpayers need to keep a close eye on tax news, Miller cautioned, noting that, “Every day, it’s fluid information.”

Because of a host of difficulties the coronavirus has created for taxpayers, accountants, and government offices, the U.S. Treasury and the Internal Revenue Service last month pushed back the due date federal returns to July 15, giving households as well as corporations an additional three months to file. 

US states join the federal government in pushing back deadlines

States have slowly followed suit, with all states with a personal income tax now extending their filing deadlines beyond April 15. New Jersey was the last one to join on Wednesday. 

KONYA, TURKEY - FEBRUARY 27: In this photo illustration a mobile phone screen displays Internal Revenue Service (IRS) logo in Konya, Turkey on February 27, 2020. Abdullah Coskun / Anadolu Agency

Democratic Governor Phil Murphy made the announcement and at the same time said the state had extended its fiscal year, which was set to close June 30 now to September 30. That’s because like many states, New Jersey relies on the annual April tax payments to pay its own bills.

According to the American Institute of Certified Public Accountants, 39 states have now pushed back their state filing deadlines to line up with the federal July 15 date, while seven other states have moved theirs back to other dates. 

It puts tax filers who were worried about meeting the usual April 15 deadline in a good spot. “You don’t even have to file,” Miller says. “You have an automatic extension right now.”

The deadline changes are not just for filing taxes — they are for paying tax bills, as well. For federal tax payments originally due on April 15, filers now have three additional months without penalties or interest. That’s regardless of the amount they owe. For states, the new deadlines vary.

And for those expecting a refund on this year’s return, there is no need to wait until summer for the new deadline. The IRS says most refunds will still go out within three weeks of filing.

Joanna Campione is a producer at Yahoo Finance

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